Islamic Relief Worldwide (IRW)—the U.K.-based parent organization of a global Muslim charity network—has urged a federal judge in Manhattan to force its American affiliate, Islamic Relief USA (IRUSA), into confidential arbitration or dismiss a high-profile lawsuit filed against it outright. In a 33-page memorandum, submitted in the Southern District of New York case on April 23, 2026, IRW portrays a lawsuit filed against it in March as little more than a “publicity stunt” and “years-long smear campaign.” IRW also seeks outright dismissal of the case, arguing that the court lacks personal jurisdiction over the case.
In a complaint filed on March 23, 2026, IRUSA accused IRW of unlawfully soliciting donations in the United States using the shared “Islamic Relief” brand, diverting funds that donors intended for IRUSA, blocking audits of joint projects, refusing to return millions in unspent grant money, and failing to cooperate in the transfer of an orphan sponsorship program.
Conduct can breach a contract. It does not void contract provisions the plaintiff dislikes.
By its own admission, IRUSA initiated the public lawsuit and severed ties with IRW largely in response to sustained congressional pressure from the House Ways and Means Committee. The U.S. charity acknowledged in its complaint that the Committee had repeatedly referred it to the IRS for investigation into its tax-exempt status due to its longstanding relationship with IRW, which it accused of having “deliberately and maliciously jeopardized IRUSA’s reputation and mission through fraudulent and illegal conduct.”
On March 30, 2026, the House Ways and Means Committee took credit for IRUSA’s decision to sue Islamic Relief Worldwide and sever ties. Chairman Jason Smith (R-Missouri) declared that IRUSA’s lawsuit “would never come about but for our Committee’s oversight,” describing the action as a direct result of the committee’s repeated referrals to the IRS over IRUSA’s affiliation with IRW, which the committee labeled a “terrorist-affiliated group” with connections to Hamas and a history of antisemitism.
Facing explicit warnings that continued affiliation could jeopardize its nonprofit standing, IRUSA suspended the Members’ Agreement in October 2025 citing the ongoing probe, sought to renegotiate key contracts, and ultimately filed suit in March 2026.
IRW’s response declares that agreements between the two organizations require private arbitration for virtually all disputes and bar public airing of disputes in U.S. courts. IRW also argues that every one of IRUSA’s claims should be resolved through arbitration—not in open court—despite the allegations of wrongdoing in IRUSA’s original complaint.
“Conduct can breach a contract. It does not void contract provisions the plaintiff dislikes,” IRW stated in its response.
IRW’s Version of Events
The memo reconstructs the timeline of the dispute to undermine IRUSA’s narrative. IRUSA terminated specific Grant Agreements in July 2025 over alleged Iranian-origin goods (sewing machines shipped through Iran for projects in Afghanistan) yet repeatedly acknowledged that “no violation of U.S. law” had taken place, the memorandum reports. IRW says it investigated, offered refunds, and proposed joint reporting to federal regulators—offers IRUSA declined.
In the memorandum, IRW paints itself as an internationally respected humanitarian powerhouse subject to rigorous oversight from the U.K. Charities Commission and other institutions with the United Nations with which it partners. It dismisses long-running terrorism allegations—Israeli and UAE designations, in particular—as “thoroughly discredited,” noting that Israel’s ban applied equally to IRUSA at the time. IRW accuses IRUSA of regurgitating “baseless allegations from a long-running misinformation campaign” that the U.S. affiliate itself once helped refute. The U.K. Charities Commission has not responded to a request for comment about the lawsuit from Focus on Western Islamism (FWI). FWI has reached out to representatives for both IRUSA and IRW and will publish any responses when received.
Scrutiny of IRW
As documented in previous FWI coverage, Islamic Relief Worldwide—and its partners—have faced sustained scrutiny over the past decade from governments, think tanks, and watchdog groups over alleged extremist links and governance practices. Reports from organizations including NGO Monitor, the Henry Jackson Society, and the Middle East Forum, have documented allegations ranging from ties to Muslim Brotherhood networks and platforming extremist imams to associations with groups accused of supporting terrorism. These concerns have been reinforced by government actions: Israel banned the charity in 2014 over alleged Hamas financing, the United Arab Emirates designated both IRW and its U.K. arm as terrorist entities, the U.S. State Department cut ties in 2021 citing antisemitism among IRW leadership, and Bangladesh barred the organization from Rohingya refugee camps in 2017 over fears of radicalization.
In July 2020, IRW’s reputation suffered a setback when it was forced to remove Heshmat Khalifa from its Board of Trustees with immediate effect after anti-Semitic social media posts he made in 2014 and 2015 came to light that month. IRW stated that it was “appalled” by the hateful comments and “unreservedly” condemned all forms of discrimination, including antisemitism.
A few months later, in December 2020, the U.S. State Department’s Office of the Special Envoy to Monitor and Combat Anti-Semitism publicly condemned IRW for its “well-documented record of anti-Semitic attitudes and remarks made by the senior leadership.” The statement highlighted a “consistent pattern of spreading the most vile anti-Semitic vitriol” and called for “zero tolerance for the blatant and horrifying anti-Semitism and glorification of violence exhibited at the most senior levels of IRW.” The condemnation contributed to the broader international scrutiny that later prompted the House Ways and Means Committee to press IRUSA to sever its ties with its U.K. parent organization.
IRW has, over the years, exerted aggressive legal pressure to shield its reputation. In a sharply worded letter dated March 2, 2026, Carter-Ruck, a London law firm representing Islamic Relief Worldwide, responded to an inquiry from FWI about the charity’s partnership with the Royal Mint.
The firm branded longstanding allegations of links to terrorism and Islamist groups leveled by Israel, the United Arab Emirates, and numerous think tanks—including the Middle East Forum—as “completely untrue,” “defamatory,” “baseless,” and “politically motivated.” It also warned the Middle East Forum “against allowing [itself] to be used as a platform to disseminate, yet further, such baseless allegations.” Referencing prior successful legal complaints against MailOnline and GB News that forced retractions and public apologies, the Carter-Ruck correspondence underscored IRW’s acute sensitivity to negative publicity.
Muslim Response
While IRW has responded to criticism with aggressive legal pressure and warnings against negative publicity, the dispute has also drawn sympathy and candid analysis from at least one prominent Muslim commentator in the U.S.
In a May 8, 2026, blog post titled “Islamic Relief USA vs. Islamic Relief Worldwide: The Waif, The Gawking, and the Tollbooth,” Muslim writer Ahmed Shaikh, a tax, trusts and estates attorney, expressed sympathy for Islamic Relief USA’s decision to file suit against its former parent organization. Shaikh, who speaks regularly about Islamic charities, argues the lawsuit offers IRUSA a long-overdue opportunity to break free from IRW’s influence and become a more transparent, accountable, and politically resilient American Islamic organization. But even as he calls on IRUSA to become more transparent, he encourages IRUSA to pursue a policy that would eliminate its obligation to file annual reports with the Internal Revenue Service.
Reduced Oversight in the Future?
Once the lawsuit is settled, Shaikh argues, IRUSA should reorganize itself as a church or religious corporation under U.S. law, which would exempt it from filing the annual Form 990 information return that other public charities must submit. This, strategy, already embraced by World Vision International, a Christian organization historically criticized for alleged ties to Islamists, would dramatically reduce public financial disclosure requirements, limit IRS oversight, and provide stronger constitutional protections against aggressive congressional investigations and regulatory pressure.
“IRUSA, or whatever name it assumes after litigation has been completed, would then be accountable not just to its board but to a larger Muslim donor community. It would be freed from needing to file 990s and be less of a target for random state Attorney General fishing expeditions,” Shaikh stated, in an apparent jab at the House Ways and Means Committee. “However, it would be accountable to the people who actually care about its mission.”
Shaikh’s recommendation that IRUSA reorganize itself as a church or religious corporation to escape the annual Form 990 filing requirement and reduce regulatory scrutiny inadvertently underscores why public discovery in this case is so important. By advocating for a legal structure that would shield the charity’s finances and governance from routine disclosure and oversight, Shaikh highlights the very opacity that has fueled congressional concern and donor skepticism. Allowing the dispute to remain in open federal court—rather than being diverted into confidential arbitration in the United Kingdom—would ensure that the facts surrounding IRUSA’s relationship with IRW, its financial controls, and its handling of donor funds are subject to the transparency American taxpayers and charitable donors have a right to expect.
